BATON ROUGE, La. — Louisiana’s lawmakers agreed Thursday to another one-year, $46 million contract extension for the firm that processes bills for the state Medicaid program, while they await the years-long process to shop around for better terms.
The contract renewal has become a yearly point of contention with House and Senate health care committee members, who feel stuck in a deal with little room to renegotiate the arrangement. However, lawmakers said Thursday they felt better about the latest contract extension, which lessens some uncertainty about add-on costs.
“You found that sweet spot that we all needed,” said Senate Health and Welfare Chairman Fred Mills, R-Parks.
Senators voted 7-0 for the extension for Molina Information Systems LLC, while House members went along with a 9-0 vote.
California-based Molina has been doing Medicaid claims processing for the state since 1981, and the health department has added new tasks to the contract over the years. The company now also does the prior authorization review for people to receive certain Medicaid services, enrolls health care providers into the program and pays the managed care companies that coordinate care for a large portion of Medicaid patients.
The contract is one of the larger deals in state government. Molina has been paid more than $500 million since 2005, according to Medicaid Director Jen Steele.
Another company had been hired to take over the work in 2012, but former Gov. Bobby Jindal’s administration fired it. Since then, new federal guidelines have been put in place, requiring the work to be broken into multiple contracts.
State health department officials said they have no way to quickly replace Molina, and refusal to extend the contract would stall payments on Jan. 1 to health plans, hospitals and others that take care of the state’s nearly 1.5 million Medicaid patients.
Steele said the contract extension the Edwards administration negotiated contained a fixed price that stayed flat from this year — but also eliminated a provision allowing for Louisiana’s costs to escalate if certain triggers were hit.
“I feel like we’re in a better posture,” Steele said.
Sen. Dan Claitor, R-Baton Rouge, lamented the state had little room to strike a better deal with Molina since it had no other vendor it could choose quickly.
“It’s an improvement over last year, which I appreciate,” Claitor said. “But it’s still a sword hanging over our heads.”
The latest extension will retain Molina through Dec. 31, 2017.
Louisiana had hired another company to take over Medicaid claims processing, Maryland-based Client Network Services Inc., known as CNSI.
But amid the transition to the new firm in 2013, Jindal canceled that contract with CNSI because of concerns the company received favorable treatment from his ex-health secretary, Bruce Greenstein, a former CNSI vice president.
CNSI sued the state for wrongful termination, a lawsuit that ended when the Edwards administration reached a settlement deal with the company in July.
Greenstein, who denied any effort to steer the contract to his former employer, was indicted in 2014 on perjury charges stemming from a criminal investigation into the contract award. But those charges were dropped earlier this year by the attorney general’s office.
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